Once the financial position of a business is determined in the form of a balance sheet, there is a need to record it in permanent form.

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1 Opening Entries Once the financial position of a business is determined in the form of a balance sheet, there is a need to record it in permanent form. The journal is the book of original entry. The journal is a record in which accounting information is recorded in chronological order. A source document is the business paper from which a journal entry is made. These may include sales slips, receipts, cash register tapes, cheque stubs, invoices, purchase orders, or vouchers. An opening entry is the entry that records the beginning balance sheet in the general journal. Posting to the Ledger An efficient method must be used to record day-by-day changes which affect a company s financial position. An account is a form used by business to sort and summarize changes caused by transactions. A ledger is a group of accounts arranged in account number sequence. The chart of accounts is a list of account titles and numbers showing the location of the accounts in the ledger. Opening an account is writing the account title and number on the heading of an account form. Posting is transferring information from journal entries to ledger accounts. Posting sorts the information, so that all activities affecting a single account are brought together in one place. Post referencing in the journal indicates the account number to which the entry was posted in the ledger. Similarly, the post reference column in the ledger shows the page number of the journal to which the entry was posted. Remember: post referencing is done only when an item in the journal is

2 actually posted to a ledger account. A detailed example follows of the journalized opening entry being posted into the ledger account for the asset, Cash. This example also shows the opening entry as it would appear in the ledger for a liability account, Bank Loan Payable; and a capital account, T. Summers, Capital. Page 1 General Journal DATE 20 EXPLANATION POST REF. Dec. 31 Cash Supplies Furniture & Fixtures Equipment Acme Plumbing Supply Bank Loan Payable T. Summers, Capital Dec. 31, balance sheet Account Cash Account No. 11 DATE 20 EXPLANATION POST REF. Dec. 31 Balance GJ (Dr) Account Bank Loan Payable Account No. 22 DATE 20 EXPLANATION POST REF. Dec. 31 Balance GJ (Cr) Account T. Summers, Capital Account No. 31 DATE 20 EXPLANATION POST REF. Dec. 31 Balance GJ (Cr)

3 Quick Check: Using the information below, prepare the opening journal entries and post them to their ledgers. Ensure that they balance Bank $2, Accounts Receivable 12, Office Supplies Land 60, Building 179, Equipment 11, Automobiles 14, Accounts Payable Bank Loan 170, GST Payable 2, GST Recoverable Chester Field, Capital 13, Chester Field, Drawings 25, Sales Revenue 186, Advertising Expense 5, Automobile Expense 9, Bank Charges Expense 7, Light and Heat Expense 3, Miscellaneous Expense Telephone Expense Wages Expense 40,000

4 GENERAL JOURNAL Page DATE ACCOUNT TITLE Doc No. Post. Ref. GENERAL

5 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

6 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

7 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

8 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

9 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

10 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

11 DATE ITEM POST REF. DATE ITEM POST REF. DATE ITEM POST REF.

Account Form. Used to summarize in one place all the changes to a single account A separate form for each account. Sample of a blank account form

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